Karachi: The Pakistan Credit Rating Agency Limited (PACRA) has maintained its stability rating for the Alfalah Islamic Money Market Fund, a low-risk investment fund focused on generating regular and stable returns through Shariah-compliant financial instruments. The Fund, which predominantly invests in Islamic banks and Shariah-compliant money market instruments, had assets under management totaling PKR 19,325 million as of March 2024.

According to The Pakistan Credit Rating Agency Limited announcement issued on 02 July 2024, the Alfalah Islamic Money Market Fund has maintained a robust credit quality, with approximately 77% of its investments in AA-rated avenues and 16% in AAA-rated categories. The majority of the Fund’s assets were placed in banks as deposits and placements, constituting about 77% of its portfolio, with another 19% invested in Government of Pakistan Ijara sukuk.

The investment strategy of the Fund has successfully limited its exposure to credit risk, evidenced by a Weighted Average Maturity (WAM) of just one day at the end of March 2024. Additionally, the Fund's exposure to interest rate risk is low, with a duration of 62 days. However, the concentration of the top 10 investors, which stood at approximately 59.77%, poses a high level of redemption pressure. This risk is mitigated by maintaining sufficient liquidity to address potential withdrawals.

PACRA notes that any future changes to the Fund's investment policy or adjustments in the rating criteria could influence its stability rating. The agency emphasizes the importance of strategic management to sustain the Fund’s performance and manage investor concentration risks effectively.